Bank of Japan Sprays World With Surprising ¥10 Trillion Gift In Valentine's Day Liquidity

In a move that will surely shock, shock, the monetary purists out there, the Bank of Japan has just gone and done what we predicted back in May 2011, with the first of our "Hyprintspeed" series articles: "A Look At The BOJ's Current, And Future, Quantitative Easing" (the second one which discussed the imminent advent of the ¥1 quadrillion in total debt threshold was also fulfilled three weeks ago). So just what did the BOJ do? Why nothing short of join the ECB, the BOE, and the Fed (and don't get us started on those crack FX traders at the SNB) in electronically printing even more 1 and 0-based monetary equivalents (full statement here). From WSJ: "The Bank of Japan surprised markets Tuesday by implementing new easing policies and moving closer to an explicit price target, the latest sign of growing worries around the world about the ripple effects of the European debt crisis on the global economy. With interest rates already close to zero, the BOJ has relied in recent months on asset purchases to stimulate the economy. In Tuesday's meeting, the central bank expanded that plan by ¥10 trillion, or about $130 billion. The facility, which includes low-cost loans, is now worth about ¥65 trillion, or $844 billion." The rub however lies in the total Japanese GDP, which at last check was $6 trillion (give or take), and declining. Which means this announcement was the functional equivalent to a surprise $325 billion QE announced by the Fed. What is ironic is the market reaction: the BOJ expands its LSAP by 18% and the USDJPY moves by 30 pips. As for gold, not a peep: as if the market has now priced in that the world's central banks will dilute themselves to death. Unfortunately, it is only at death, and the failure of all status quo fiat paper, that the real value of the yellow metal, whose metallic nature continues to be suppressed via paper pathways, will truly shine.

Only one out of the 11 analysts polled by Dow Jones Newswires had predicted the BOJ to ease this week.

Most BOJ watchers had said that while there were concerns over the impact of the strong yen and the European debt crisis, neither financial nor economic conditions had worsened to levels that warranted immediate further action.

The BOJ policy board also revised the wording of its "understanding of price stability," saying now it has set a "price stability goal" of 2% or lower in the core consumer price index in the medium- to long-term and a goal of 1% growth for the time being. For calendar year 2011, Japan's core consumer price index—excluding food prices—was negative 0.3%.

The bank had come under criticism that its definition of price stability, the goal it seeks to achieve in its fight against deflation, was too convoluted and vague. Such attacks had increased in recent weeks after the U.S. Federal Reserve in late January adopted a more explicit price target.

Faced with a prolonged deflation, politicians have stepped up their calls on the BOJ to take fresh action, with some threatening to revise legislation to strip away the central bank's independence from the government.

First of all, don't get us started on inflation targeting. Or rather, get Dylan Grice started: he will tell you all about it, and then some.

And while we now really just can't wait to bring to our readers what the global central bank balance sheet will look like after February, when it takes into account the recent GBP50 billlion BOE expansion, the €500-€1000 billion European LTRO part Deux, and now the ¥10 trillion additional BOJ easing, here is what we said on the topic back in May of 2011.

"In a sign some in the BOJ were more cautious about the economic outlook than Shirakawa, Deputy Governor Kiyohiko Nishimura proposed on Thursday expanding the central bank's asset buying scheme by 5 trillion yen ($62 billion). While the proposal was outvoted by the board, some market players said it may be a sign the BOJ may loosen policy as early as next month. "And loosen it will, because unfortunately as the past 30 years have shown, the country at this point has no other choice but to take the same toxic medicine which merely removes the symptoms briefly, while making the underlying problems far worse. Also, with the Fed threatening to end QE2 in precisely two months, someone out there has to be dumping hundreds of billions in infinitely dilutable 1 and 0s into primary dealer prop desks. Furthermore, as shown above, the BOJ needs not to buy securities outright: tinkering with the shadow economy in the form of the repo market will provide just as desirable an outcome… If, of course, said outcome is to see gold and silver continue on their relentless rise to new all time record highs. And/or higher. Because the only thing limiting the price of gold is price stupidity and the amount of paper money in existence. Both are infinite.

It's good to see that our May 2011 quote on what the only realy gating factor on the price of gold is has now been broadly absorbed in the asset management vernacular. And yes, once the market does realize what is happening, following the usual 6-8 week uptake period, expect another step function higher in precious metals, CME margin hikes notwithstanding (and the recent CME faux margin cut bull trap aside).

Finally, unlike our own Fed, at least the BOJ is not shy telling the world it is openly buying up REITs and ETFs. For some odd reason our boys over at Liberty 33 are still playing so coy they can only punch their equity trade tickets via Citadel.

Now I have to decide which story is more worrisome. The story about that Russian Sub that was on fire with nukes loaded and minutes away from exploding and scrubing off a piece of Russia or this story. [LINK]

A reader's comments in response to a New York Times article on the situation in Greece (and soon to be the rest of PIIGS+France+U.K.) is purely epic, and I just wanted to share - but let me preface this by saying I'm very much Austrian School, and this reader's comments at least strongly suggest he may be not so inclined; so how incredible is it that he and I have arrived at exactly the same sentiments (with the exception of his 2nd sentence - see my comments after his indented quote in regards to this) on the whos [central fractional reserve bankster parasites] and the whats [enslaving nations] being done, and the instrumentality [debt] being used?:

Bill Appledorf

Accumulation by appropriation. Capitalism in its most primitive form: theft.

Like the Europeans appropriated the assets of the American Indians. Like colonial powers do to indigenous people everywhere: steal the land, steal the resources, price out or kick out the people who are living there.

Debt is war by other means; keep rolling it over until a country can no longer pay it, then the country is yours. Indoctrinate the rubes into blaming the victim, and you'll be able to do it here. All those houses stolen by the banks; AND the banks got $700 billion in taxpayers' cash plus 14 trillion or so in zero-interest loans.

Looting economies without having to drop a single bomb. Enslave a global workforce to boot. Sweet.

So, I agree with Bill Appledorf with the exception of his 2nd sentence.

Capitalism in its most primitive form, however, would not allow global fractional reserve banking syndicates to link up with wannabe monopolilistic or ogilopolistic businesses - only being able to do so through the Deep Capture of alleged 'elected' politicians/legislators and the so-called 'regulators' that they appoint, aka Crony Capitalism.

But capitalism is dwindling. It survives only in the beating hearts of those businesses still functioning and not on the teet of taxpayer dollars provided by Deeply Captured politicians and regulators, with the former folding by the day (especially in the form of what used to be the main driver of economic growth: small businesses).

He is absolutely correct that debt is being used to enslave nations and appropriate wealth of of those not in the Crony Class.

I could then contemplate replacing what I lost in the boating accident and start again re-building what Granma left to me! On the other hand, that 60" LED, 3D, Social Media enabled TV, with no down and 5 years to pay, interest free, is pretty darn tempting (?)

long story short, It got fucked because of Government intervention, they said they they are ready to bail out the economy! They were heavly involved in carry trade and which created foreign currency mismatch (banks issued short-term liabilities in order to invest in long-term assets)

in 2007, after ten years of growth, the big three Icelandic banks, Kaupthing, Glitnir, and Landsbanki, owned assets in excess of 1100 percent of Iceland's GDP

Then Kratos came from Greece... reminds me of some graphix tyler posted a day ago..

Funny how everyone ignores Japan. It's like Japan is the weird guy you work with that everyone jokes about how if he was fired he would go to work the next day firing a semi screaming this and that about respect.

In fact I am betting Japan gets looked upon very soon by a rating agency. See, they are stuck with the Obama disease, he needs to keep spending and raising debt. Problem is the value of bonds are sh*t. The US is junk right now and S&P will fire another shot this year. Bank on it.

Back to Japan. There is no revenue coming in, trade deficit that would make your eyes bleed that and Japan (like China) are net importers of energy = trade deficit forever and ever = a junk rating very soon.

And inflation will eat the rest of the economy up. Maybe, just maybe they become warriors again and chop off some well deserved heads.

I can not figure out why the Yen is "strong"...it seems to me with all of Japans debt...it should not be.....but what do I know about today economics...my econ 101 does not work anymore in a world of Central bankers

Stop!!! You can't be talking about the same Japan that has already lost 12 solid years in the game of kick the can? I guess we will call it a Whitney Houston, when you're soo far in why not go all the way? WTF, honestly, please Krugman, Summers and all the rest of you losers tell me how this will play out for my 12 year old son who gets straight A's and participates in all the local functions thinking he is making a difference? The NWO has no time for kids like my son and when they decide to pull the plug it will be like TFB for him... All I go to say is watch your back bitchez, the clock is ticking ...tick,tock,tick,tock,tick,tock, can you hear it yet?

No, that's the sound of Americans jumping up and down watching their team win the superbowl. Americans only give a shit about sports, reality tv and beer. Oh and gay marriage. They could care less about anything else in large numbers. The 1/10th of the 1% gotta be laughing their asses off at us. What a joke we are.

...what? them thar Shinto ''gods of Loyd'' need more human sacrifice? Well, were all due for another ''Title Wave'' kick in the Fannie. Lol. ...and the Whore of Babylon has another drink of wrath. http://www.youtube.com/watch?v=ySgOds3bzcc

Nobody will be buying fucking houses. Guess what happens next month? The housing market gets flooded with all the people that thought they would wait out the "dip" in housing. And as the banks flood the markets with foreclosures! Setting up QE mother fucking 18 (or whatever the fuck number we are on).

They won't flood the market with fiat forever. How long is forever? Forever-ever? Forever-ever??? What if forever already came and went? What if this is us dead and remembering life before a catastrphic event? How dense can you be not to question this world and its reality? Butterflys and teacups, sure, all of it.

Well trebu, you make a good point. Many people thought the Ponzi was gonna cough up a lung in the late 70's, but thru some happy circumstance for the Ponzi Drivers, [North Sea/North Slope coming on line, largest creditor then, largest debtor now] Volker was able to pull out of the dive and get the Ponzi climbing again. I don't see the magic bullet arriving this time. The math dosen't support belief in magic salvation this time around for the Ponzi. If you look at this in terms of your life time, then yes, they've always been able to come up with, if not a stick-save, a sledge hammer, to get the Ponzi working again in times of Ponzi-crisis. But if you take a broader, historical perspective, the Ponzi always goes belly up.

If the crash is significant enough, people will, at first be reluctant to re-ignite a Ponzi. We may have a period of Neo-Enlightenment for decades ... before people forget, before none are left alive who remember

LH... they WILL flood the market forever, fundemental misunderstanding on your part...in a fiat world that is what they do....and as for the POG it WILL be the death of the market and not just "more buyers of paper gold than sellers of paper gold" that will bring in the new realization of gold's worth. The paper market can satisfy the needs of those who seek paper gold just as long as there is still paper....(longer actually...those who can be satisfied with 'ownership' short of actual possesion can be made happy with electrons.)

While I understand the technical merits of your statement ... please approach my statement from a philosophical and cultural frame of reference. If the BoJ pegged the yen at 85.00/USD ...

... how would you describe their action in terms of their culture and using philosophical terms rather than financial?

Please note my reference to March 11th re: earthquake, tsunami & Fukushima; and then look forward into Japan's future if they continue on the same path they have been on, where they accept limitations and the certainty of future calamities and degradations.

The Japanese have been busy creating a debt tower, and it looks like it just got bigger. I wonder how long before their currency goes into spontaneous combustion. We are about to get a first hand look at the end result of QE to infinity with Japan as the test case. Once the Yen gets bagged our own future will be unmasked, and it may launch an accelerated cascade out of all things paper. I think Kyle Bass is right. A sovereign debt crisis in Japan may be ultimate financial catatrophe that brings the whole fiat house crumbling down.

What is "surprising" about Japan being up on the roster of competitively devaluing nations?

What really burns my assets is that there seems to be no end to the weapons of mass distraction TPTB fires at the zombified masses. If it isn't contraception then it is some other BS. Not that the masses need much help in being distracted: poor Whitney Houston, Grammies, American Idol, Olympics this summer, whatever.

Meanwhile, the sovereignty of nations, including our very own, is being handed over to supernational, unelected organizations (UN, WB, IMF, etc.) or private, foreign-owned multinational corporations (e.g.: the Fed).

Our political parties are differently colored cartels of private interests with a specific agenda. Might as well call them the Democratic zaibatsu and the Republican zaibatsu. Is it any wonder that our federal .gov runs at the beck and call of the same interests?

Meanwhile, our states, counties and cities are sinking in debt. Our social systems (educational, justice, healthcare, finance and so on) are in shambles and the population has harsh times to look forward to: higher taxes, crumbling infrastructure and diminishing services. The criminal class of bankster-politicos (the line has blurred between Wall St., K St., and the hallowed halls of Congress and the Executive Branch) gorges itself on stolen gazillions.

We don't really mind -- as long as there is beer in the stores and good shit on TV. Do we?

When do the markets choke on all this liquidity? The Fed, ECB, BOJ (who am I missing) are flooding the markets - yet no real recovery is even close. The idea that the Fed can now keep inflation from spiraling up and hold off the bond vigilantes is laughable.

The Yen is only off fractionally vis a vis the dollar since the BOJ action to print 10 trillion Yen in some more good-old fashion quantitative easing. After all, it was this wonderful country that invented the term and infected our central banker "Helicopter Ben". This is insanity. This tells you that fiat currencies have us all high on something very toxic. It's like arsenic, it can take a while before it kills you, but eventually it WILL kill you. Maybe the Japanese people (as old as they are) will put an end to accepting JGB coupons for far less than inflation for another 20 years. I guess the term kamakazis does apply to more than those who flew their planes into Allied carriers during WWII. It now applies to every Japanese man, woman and child, that invest their hard earned savings into these wealth destroyers.

I like the doubtful nature of this article that this will effect gold prices before the big fiat/debt collapse. It is a thoughtful argument based on what governments have tried in the past, but as soon as people start believeing that, gold will rape them to the upside. If gold were up 100 on this news, we'd all know why. But it isn't. So we doubt the market can ever be real. The market is real. And Volcker's habit turned policy of selling US sovereign gold at exactly the time when it should be bought continues to be a boon for real gold holders.

Yes the gold play has been very quiet.....almost too quiet....Every bit of new fiat I see as a reson to buy more gold...I think other people feel the same way...all over the world..we are watching this print until you die happen before our eyes..and we all know the ending....so we are buying PM´s....I bet Buffett is too...Soros also...you have too...add in the Russians, Chinese, anyone of the western worlds enemies, even small up and comers like Colombia are buying gold.....but it has been flat for an awful long time in such a time of worry...200 billion for Greece last week and not a move...159 billion for England..nothing...now Japan...nada...the USA announces another 1.3 trillion dollar deficit.....flat as pancake......hmmmmm

Would someone PLEASE explain to me how we can ever get hyperinflation in an environment of extraordinary global wage arbitrage and cratering asset values? What is the mechanism for passing that inflation on to wages and driving up asset values? Answer: there is none. Hyperstag/biflation I will give you. Hyperinflation fughet about it.

Different measures of inflation; the Establishment and its hired eGunomists use "goods baskets" (sans the annoying outliers) as measure of inflation. People who have more insight use money supply stats.